U.S. dollar share of global currency reserves fall further - IMF

FILE PHOTO: Arrangement of various world currencies including Chinese yuan, U.S. dollar, euro, British pound, pictured in Warsaw, January 25, 2011 REUTERS/Kacper Pempel/Illustration/File Photo

(Reuters) - The U.S. dollar’s share of currency reserves reported to the International Monetary Fund fell in first quarter of 2018 to a fresh four-year low, while euro, yuan and sterling’s shares of reserves increased, according to the latest data from the International Monetary Fund.

The share of dollar reserves shrank for five consecutive quarters as the greenback weakened in the first three months of 2018 on expectations faster growth outside the United States and bets that other major central banks would consider reducing stimulus. Still the dollar has remained the biggest reserve currency by far.

However, the dollar strengthened in the second quarter on fears about a global trade war and the European Central Bank signalling it would not raise interest rates until latter half of 2019.

Global reserves are assets of central banks held in different currencies, mainly used to support their liabilities. Central banks sometimes have used reserves to help support their respective currencies.

Reserves held in U.S. dollars climbed to $6.499 trillion, or 62.48 percent of allocated reserves, in the first quarter. This compared with $6.282 trillion, or 62.72 percent of allocated reserves, in the fourth quarter of 2017. The share of U.S. dollar reserves contracted to its smallest level since reaching 61.24 percent in the fourth quarter of 2013, IMF data released late on Friday showed.

Ranked second behind the greenback, the euro’s share of global reserves reached 20.39 percent in the fourth quarter, up from 20.15 percent in the fourth quarter. This was its largest share since the final quarter of 2014, but well below the single currency’s peak share of reserves at 28 percent in 2009.

China’s share of allocated currency reserves increased for a third straight quarter to 1.39 percent. The IMF had reported the yuan’s share of central bank holdings for the first time in the fourth quarter of 2016.

Sterling’s share of currency reserves moved up to 4.68 percent in the first quarter, the biggest since the fourth quarter of 2015, IMF data showed.

The yen’s share of currency reserves retreated to 4.81 percent from prior quarter’s 4.89 percent, which was its biggest since the fourth quarter of 2002.